Business insurance and how it affact on the taxes Essay

Business insurance and how it affact on the taxes - Essay Example The tax on insurance premium does not in reality have an effect on the individual policy holder in drastic ways. The more flourishing an insurance cover provider is, the higher their taxation on the insurance premium. Both IRS publication 334 (small business tax guide) and IRS publication 535(business expenses) are readily available in the internet and are a perfect resource for many business owners. Certain types of enterprises should be cautious, and make sure they get skilled tax assistance when they are preparing their income and when they are listing their premium deductions. This is as a result of the tax avoidance schemes which have been caught by IRS over the years. These unscrupulous people have made taxation in businesses exceedingly difficult no for everyone i.e. even for the fair tax payers. There is two common set of laws that are usually applied during the deduction of premiums. One of these laws is that insurance premiums have to be to the advantage of the enterprise and should be intended for a business purpose. The other is that, insurance covers benefitting groups e.g. managers, employees and owners alike and identifying the enterprise, are good. Those premiums that are paid for the advantage of one, normally the owner of the business are bad. There are a number of commonly accepted premium deductions. One of these is credit insurance. Credit insurance is used to cover losses from bad debts for business in order for it to continue running its activities. Another one is group hospitalization and employees’ medical insurance. This one also includes the long term care insurance. Liability insurance is also another one. It helps to protect the business from any losses which would arise from the liabilities within the business. Malpractice insurance also accepts premium deduction. This insurance covers one on personal liabilities for professional